Quarterly show to set trend
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Market fate linked to corporate scorecard

OUR SPECIAL CORRESPONDENT

Mumbai, Oct. 17: The skittish stock markets will pick up their cues from a couple of events next week.

First, index heavyweights such as Reliance Industries (RIL), TCS and Wipro will announce their second-quarter results. Second, the Reserve Bank of India (RBI) will unveil its revised monetary policy on October 24.

The announcements will shape the way that the bellwether stocks behave in the immediate term and provide some signals whether the global economic slowdown has started impacting India Inc as well. Hero Honda and Jaiprakash Associates — two other sensex listed companies — will also declare their results next week.

RIL with 13.50 per cent has the largest weightage in the sensex. The stock has been one of the hardest hit in recent times because of fears that a economic slowdown will impact its refining margins.

So far, the second quarterly performance of India Inc has thrown up a mixed bag. Although Infosys Technologies reported net profits that were ahead of estimates, it scaled down its revenue guidance.

Hyderabad-based Satyam Computer also trimmed its outlook for the year today.

HDFC Bank, Housing Development Finance Corporation (HDFC) and Larsen & Toubro (L&T) were the other majors who declared their numbers. Though the HDFC twins met estimates, L&T was a huge disappointment as margins took a hit.

If the companies (slated to declare results next week) dish out good numbers, a drastic fall in stock values could be arrested, said an analyst with a foreign brokerage.

However, Arun Kejriwal, director of KRIS, differs with this view. He believes that the stocks have been mauled even after the companies posted good numbers, attributing the fall to the panic that has gripped the market.

The results declared so far have not been negative. Yet, the sensex fell below 10000 today. This shows that investors have overlooked the good results, he said.

Kejriwal, who does not want to predict the bottom of the sensex, believes that it will find support at 8800 levels.

The market will also be waiting to see whether RBI governor D. Subbarao, who took charge last month, tweaks interest rates.

The expectations are that he can bring down the repo rate by at least 25 basis points. The repo is that rate at which the central bank provides liquidity to banks and it now stands at 9 per cent.

Any cut in the repo rate is seen to benefit bank stocks. Analysts say the markets will also eagerly wait to hear the new governors comments on the Indian economy.